Buyer's dilemma...

With the current market, buyers are challenged with making decisions on the kind of property to purchase. More important than that is the type of sale the property is being marketed.

Whether it's a short-sale or a bank-owned, buyers need to be aware of short falls of each kind of transaction. While these types of sales usually give buyers a great opportunity to get a "good deal", they both present challenges.

Short-sales, also known as pre-foreclosure, pre-auction, NOD (notice of default), are properties that are being sold short of what they are owed to the bank. In other words, if there is a loan on the property of $500,000, and the property is being sold at $400,000, the bank is going to be paid less that what they are owed (in this case $100,000). When a bank takes a loss such as this one, they usually take their time in analyzing the loss, they order appraisals, broker price opinions, and weigh their pros and cons in making a decision to allow a seller to sell their property as a short-sale. Short-sale properties are somewhat priced competitively due to timing issues (bank may foreclose while property is being marketed for sale.)

With a short sale, since a private entity is selling the property, all aspects of a sale mimic that of a standard sale, i.e. disclosures, seller's history with the property, etc. The buyer usually will get more information on the property, hence make a more sound decision on the condition and potential of the property.

Bank-owned properties, also known as REOs (Real Estate Owned), are properties that the bank obtained through a foreclosure (or a trustee sale in California), and is now marketing the property for sale usually at market value (or sometimes less than market to be more attractive), and also give buyers a good opportunity to get a "good deal", but pose a great issue to buyers. Since the bank is selling the property and since it's never lived on the property, the bank is exempt from most disclosures, failing to give buyers a full picture on the history of the property, which a private seller is legally obligated to disclose.

Disclosures include: neighbor issues, property history, faulty systems, repairs and so on.

To get more information about these and other topics, call Nelli Derderian @ 818-414-0513.